City says Fort Trumbull development delayed

New London - The first new construction in Fort Trumbull since the area became the focus of a national fight over eminent domain was delayed Thursday after developers apparently were unable to demonstrate how they were going to finance the $24 million Village on Thames project.

The Renaissance City Development Association said Monday's groundbreaking for 34 units of rental housing is postponed. A closing to transfer the property to developer Riverbank Construction did not take place Thursday as planned, said Karl-Erik Sternlof, the RCDA's first vice president.

Mayor Daryl Justin Finizio issued a statement shortly after the announcement, saying the city had fulfilled its obligations under the agreement with developer Robert Stillman, and "the responsibility now lies with the developer to provide adequate financial representations to proceed.

"The City will continue to monitor RCDA's and the state's oversight of this process and will withhold further comment until that review is complete,'' Finizio said.

The 2010 development agreement between Stillman and the RCDA is set to expire at 5 p.m. today. The agreement has provisions for extensions, but Sternlof said no one has asked for one.

"All parties are aware of the agreement,'' Sternlof said. "We will provide further updates as things develop."

The RCDA is expected to meet at 7:30 this morning at its office in the Harris Building on State Street.

Stillman, who has proposed building 103 housing units in Fort Trumbull, did not return The Day's telephone calls Thursday.

RCDA and the state Department of Economic and Community Development has oversight of the project's finances.

"If the RCDA and the state DECD have determined that the necessary financial documentation and assurances are not in order, then a delay in closing and ground-breaking for this project is appropriate,'' Finizio said.

Jim Watson, department spokesman, said his agency was informed by the RCDA that the closing was postponed and expects to hear from the agency after this morning's meeting.

"The RCDA has not indicated to us that the terms of the development agreement have been satisfied,'' Watson said.

City Councilor Adam Sprecace, who learned of the project's delay while in a meeting Thursday, said he had no idea there was a problem.

"For the first time in my council career, I was speechless,'' he said. "This is totally unexpected. All indications (said) we were going to go forward."

The project was to be built on land that was once the Naval Undersea Warfare Center, which was given to the city after the center was closed in the mid-1990s. It is adjacent to properties that were taken by eminent domain and were at the center of a legal battle over property rights argued before the U.S. Supreme Court.

The saga began in 2000 when the New London Development Corp., now the RCDA, working as an agent for the city, began buying up properties in the 90-acre Fort Trumbull Municipal Development area. Pfizer Inc. had recently built and opened a $300 million state-of-the-art research center on adjacent property on Pequot Avenue, and the city was anxious to clean up the neighborhood, bring in more business and raise the tax base.

The plan was to level the existing neighborhood of single- and multi-family houses in Fort Trumbull, as well as the bones of the abandoned federal research center, and build a hotel, restaurant, conference center, athletic center, bioscience office park and new housing.

Most property owners sold their land, but some resisted and the city took the properties by eminent domain, citing a clause in the law that allows municipalities to take land for economic development.

A lawsuit filed by a handful of the property owners, and argued by the nonprofit Institute for Justice, was decided by the Supreme Court in 2005. In a split and controversial decision, the justices sided with the city and said it was lawful to take private land for future economic development. All the buildings were demolished.

Except for about $25 million in renovations to an existing building in Fort Trumbull, no new construction has taken place. Corcoran Jennison of Boston, the original developer, lost its preferred developer status in 2008.

Stillman was named the new preferred developer in 2010 and proposed 103 housing units, which at first were going to be condominiums, but later were described as rentals.

The irony that the first new building in the Fort, where a neighborhood of one- and two-family houses was razed, was to be housing, was not lost on some.

"The Fort Trumbull debacle remains Exhibit A throughout the nation as to what happens when government abuses eminent domain and provides massive corporate welfare to private interests,'' Scott Bullock, an attorney for the Institute for Justice, said in an email statement to The Day.

"Thirteen years after passage of the redevelopment plan, close to 100 million in taxpayer-money wasted, residents being evicted from their homes, and New London gaining a national reputation as an abuser of rights, it looks like the re-named NLDC will now try to put in a lesser version of the real neighborhood that was once there,'' Bullock said.

Late last month, the RCDA and Stillman announced that the financing was in place and that construction would begin May 20. Stillman said 15 units would be built on Parcel 2B. Five units in four buildings would face Columbia Cove, and another five buildings, with a total of 10 units, would be angled toward the water. Detached garages with gabled roofs would be built behind the units.

Parcel 2C, which is adjacent to Fort Trumbull State Park, was to have 19 units. One building would have four units with garages below the living areas. Six other buildings would include three-bedroom, single-family units with attached garages.